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Accounting for service charges and service charge accounts

Accounting for service charges and service charge accounts in the property industry is a specialist area that requires expertise and an understanding of the sector. On this page you can access a range of articles, books and online resources providing quick links to practical guidance and background information.

What's on this page?

  • Guidance and support from ICAEW
  • FRC guidance
  • Legislation
  • Tribunal decisions
  • Guides
  • Articles and books from the Library

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ICAEW guidance and support


TECH 03/11 Residential service charge accounts
Guidance on accounting and reporting in relation to service charge accounts for residential properties on which variable service charges are paid in accordance with a lease or tenancy agreement. The guidance was prepared by a joint working group comprising representatives of the Association of Chartered Certified Accountants, ICAEW, the Institute of Chartered Accountants of Scotland, the Association of Residential Managing Agents and the Royal Institution of Chartered Surveyors. Published in October 2011.

TECH09/14BL Accountants' reports on commercial property service charge accounts
Guidance on the conduct of a review engagement in the context of a report on the annual statement of service charge expenditure. Published in May 2014.

Previous updates


ICAEW response to UITF Information Sheet 92 Residents’ Management Companies Financial Statements (available from ICAEW Library)
ICAEW response to the Accounting Council, published as ICAEW REP 167/12 on 15 November 2012.

At your service – accounting for RMCs
Economia, September 2012
Should residential management companies hold service charge money in trust or incorporate it into their profit and loss accounts? This article outlines the debate on the financial statements of residential management companies and includes a summary of ICAEW's position.

Residential service charge accounts
Article from Mary-Lou Wedderburn, Consultant and Secretary to the Service Charge Accounts Working Party, which looks at the current situation for residential service charge accounts and at the guidance in TECH 03/11. Published on the Talk Charity blog on 8 August 2012.

Concerns raised on service charge accounts
Article from Andrew Güntert, a member of the LSCA Technical Committee, highlighting questions raised at the LSCA Small Practitioners' Conference on ICAEW's residential service charge accounting and reporting guidance. Published in May 2012.


Residential service charge accounts (available from ICAEW Library)
An alert issued by the ICAEW Service Charge Accounts Working Party on 12 October 2011 on the treatment of service charge transactions within statutory company accounts.

Accounting for service charges: implications of the ‘Daejan’ appeal ruling
Article by Mary-Louise Wedderburn which looks at the question of landlord liability for property maintenance costs and the implications of Daejan Investments Ltd vs Benson & Ors case. This article first appeared in Audit & Beyond in May 2011 and is available to Audit and Assurance Faculty subscribers.

Service charge accounts – Q&As (available from ICAEW Library)
Article from lecturer Mike Ulrich addressing some questions relating to service charges from the 2011 spring roadshows. The article first appeared in Audit & Beyond newsletter of ICAEW Audit and Assurance Faculty in September 2011.


TECH 01/10 Accounting for service charges (available from ICAEW Library)
Consultation draft technical release issued by ICAEW, the Association of Residential Managing Agents (ARMA) and Royal Institution of Chartered Surveyors (RICS) in October 2010 for public comment. Withdrawn following the publication of TECH 03/11.

Service charge accounts
Guidance issued by the Audit and Assurance Faculty in April 2010.

Update on residential service charge accounts (available from ICAEW Library)
Summary of legislation implemented and ICAEW Technical Releases issued on residential service charge accounts, published on 15 July 2010. The previous consultation draft TECH 03/07 has been withdrawn.

Financial Reporting Council guidance

Residential Management Companies' Financial Statements
Financial reporting exposure draft and draft abstract issued by the FRC on 5 August 2013. The consultation period closed in November 2013 and the FRC commented: ‘Most Residential Management Companies will be small companies, the accounting requirements will need to comply with the new EU Accounting Directive. Therefore, we propose to take this project forward as part of our review of the FRSSE and the requirements for small companies more generally.’

UITF Information Sheet 92 (which contained UITF Draft Abstract 49 Residential Management Companies' Financial Statements) has been withdrawn following the publication of the new drafts.


Landlord and Tenant Act 1985
The latest available version of the act.

Landlord and Tenant Act 1987
The latest available version of the act.

Commonhold and Leasehold Reform Act 2002
The latest available version of the CLRA with the option to view the text as originally enacted and the associated explanatory notes.

The Approval of Code of Management Practice (Residential Management) (Service Charges) (England) Order 2009
Full text of the Statutory Instrument (SI 2009/512) as enacted.

See also:
Appendix A of TECH 03/11 Residential service charge accounts provides an overview of the law governing residential variable service charges.

Tribunal decisions

Service charge accounts and recovery of costs: Implications of Leasehold Valuation Tribunal decisions
Article published on 10 August 2011 which focuses on two recent cases in the Upper Tribunal (Lands Chamber) which 'should be of particular interest to those who advise upon and prepare service charge accounts on a regular basis'. The article has been written by Nicholas Kissen, Senior Adviser at the Leasehold Advisory Service, who explains the implications of these Leasehold Valuation Tribunal decisions.

The decisions in these cases can be obtained from the Lands Tribunal website at [2010] UKUT 283 (LC) and [2011] UKUT 268 (LC) respectively.

Guides and publications

Association of Retirement Housing Managers (ARHM)

ARHM Code of Practice
The Code of Practice can be downloaded from the ARHM website and applies to specialist retirement housing schemes sold on long leases.

Association of Residential Management Agents (ARMA)

Association of Residential Management Agents
Organisation which focuses ‘exclusively on matters relating to the management of residential leasehold blocks of flats’.

Leasehold Advisory Service (LEASE)

The Leasehold Advisory Service
Public body which provides free advice on the law affecting residential leasehold property in England and Wales and produces a number of useful publications available for download, including one specifically on service charges.

Royal Institution of Chartered Surveyors (RICS)

Service Charge Residential Management Code
Guidance applying to residential leasehold properties in England aimed at managing agents, landlords and leaseholders.

Service Charges in Commercial Property
Professional Statement effective from 1 April 2019 setting out the standards of management for commercial property and mandatory obligations for RICS members and regulated firms.

Service charges and tenant alterations
Information paper examining the apportionment of service charges where a tenant makes alterations to a commercial property.

RICS has also produced a number of publications that TECH 03/11 has identified as being relevant to accounting for service charges in mixed blocks, including:

Articles and books in the Library collection

To find out how you can borrow books from the Library please see our guide to book loans. You can obtain copies of articles or extracts of books and reports by post, fax or email through our document supply service.

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